Chapter 29

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Chapter 29 - The Aggregate Demand and Aggregate Supply

Key Items

  • The main focus of this chapter will be the aggregate expenditures model
  • The aggregate expenditures model was created by John Maynard Keynes
  • The model can be used by government in two ways by increasing Government Purchases or Lower Taxes to achieve equilibrium GDP

Key Symbols

  • C = Consumption
  • Ca = Consumption after taxes
  • S = Savings
  • Sa = Savings after taxes
  • Ig = Gross Investment
  • X = Exports
  • M = Imports
  • Xn = Net Exports
  • G = Government Purchases
  • T = Taxes

Key Formulas

  • C + Ig = GDP (private closed economy)
  • C + Ig + (X - M) = (private open economy)
  • C + Ig + Xn + G = (public open economy)
  • 1/(1 - MPC) = Multiplier
  • MPC + MPS = 1
  • Increase in Aggregate Expenditures/Increase in Real GDP = MPC

Assignments

  • Assignment #1 : Vocabulary
    • Use the following vocabulary list for chapter 29. This time I want you to use a new program called quizlet. You will find an example on this page under the vocabulary section. This program will allow you to create web-based flash cards that will allow you to study in 3 different ways from the same work that you create. Additionally you will be able to view these on certain types of phones, so you can study on the go!! After using this item, I would like to hear your feedback (did you think that it was useful or not?)
    • Once finished please send me your link to your flashcards and a short opinion if you felt the program was useful or not to mrphillipsmontour@gmail.com The subject should be Assignment #1 Period .
    • Terms to define: Aggregate demand - Aggregate Supply Model (ADAS), Aggregate Demand, Real-balances Effect, Interest-Rate Effect, Foreign Purchases Effect, Determinants of Aggregate Demand, Aggregate Supply, Immediate-short-run aggregate supply curve, short-run aggregate supply curve, long-run aggregate supply curve, Determinants of aggregate supply, Productivity, Equilibrium Price Level, Equilibrium Real Output, Menu Costs, Efficiency wages
  • Assignment #2: (Coming Soon)

Vocabulary


Resources

  • Online Textbook PowerPoint
  • Mr. Phillips Chapter Slides